I am the first to admit that I don’t know exactly how this whole shadow inventory thing is going to play out. But I am certain that it is a legitimate area of concern.
I am the first to admit that I don’t know exactly how this whole shadow inventory thing is going to play out. But I am certain that it is a legitimate area of concern.
How can we don’t see these
How can we don’t see these foreclosed home?
1, Did they get loan-modified?
2, Banks don’t have enough hands to handle?
3, Banks purposefully hold them for high price?
4, Banks simply just rent it back to the owner?
no
yes
yes
no
no
yes
yes
no
One caveat: this graph is
One caveat: this graph is based on the number of NODs, rather than the actual number of homes that have been / will be foreclosed. Given the extensive involvement of the Government, it may not be a completely accurate assessment of shadow inventory.
Is it possible to use a closer metric, such as NOTs?
lubenthrust wrote:One caveat:
[quote=lubenthrust]One caveat: this graph is based on the number of NODs, rather than the actual number of homes that have been / will be foreclosed. Given the extensive involvement of the Government, it may not be a completely accurate assessment of shadow inventory.
Is it possible to use a closer metric, such as NOTs?[/quote]
You mean the 4 million people they were suppose to help and only actually helped 150k (so far)? Or the fact that previous attempts under the Bush administration were basically total failures, and so far Obamas plans havnt done much better?
The majority of home loan mods so far have been kick the can down the road types. Freeze your interest rate for a few years, make it a 40 year loan and tack the missed payments on at the end, Repayment plans. These are delay tactics, not actual solutions. They will redefault as soon as we catch up to the can.
Using NOT’s has its own problems. Just because NOT’s are down doesnt mean the pain has stopped, the NOD’s could be ending in short sales, an increasingly popular way to get out of foreclosure. States and companies were enacting more and more moretoriums on foreclosure, distorting the NOT’s too, so the argument that only NOD’s are distorted is hard to make.
Basically we end up at the old maxium that more data is better data, and prob should look at both.
I agree with you completely.
I agree with you completely. But my real point is that even if NODs are nothing more than delay tactics and 100% of NODs eventually go through foreclosure, we don’t know exactly how long it takes to get there. There’s a variable lag between NOD and foreclosure rather than a constant one. So correlating current sales with current NODs is not going to give you a valid assessment of shadow inventory.
NOTs on the other hand are absolute, right? A home that has been NOT’d is about to go through foreclosure, and thus, would be more accurate for Rich’s purposes.
Not exactly, because the
Not exactly, because the thrust of the topic is “what about all these homes that have gone into default?” (Per the prior column I linked to).
If you just look at NOTs, that doesn’t really address the question. There’s also the short sale thing, as DWCAP mentioned.
But it would be interesting to look at sales/NOT for its own sake. I will put up a graph soon.
Rich
Does a lender have to produce
Does a lender have to produce an NOD after a certain number of days a payment becomes past due? Just wondering if this is something the lender has a level of dicression regarding.
Rich Toscano wrote:
But it
[quote=Rich Toscano]
But it would be interesting to look at sales/NOT for its own sake. I will put up a graph soon.
Rich[/quote]
If you do sales, any way to indicate which is the distressed/short sale and/or REO as opposed to – what’s the word – no regular/normal b/c short sale seems to be that now. Organic?
Ah, sorry DWCAP. I should
Ah, sorry DWCAP. I should have read the end of your post more carefully. NOTs are not (haha) absolute — but if your ultimate goal is to make a judgement on shadow inventory (which is what I assumed from the article), it makes more sense to use a metric that has a higher probability of foreclosure (NOT) than one that has more possible outcomes (NOD can result in loan modification, short sale, visible foreclosure, shadow foreclosure).
BTW, I’m basing the assumption that NOTs have a higher probability of foreclosure than NODs on the fact that there is less time between a NOT and foreclosure than a NOD and foreclosure.
lube, I think we are
lube, I think we are discussing some very fine details here, some of which is mostly matter of opinion. If shadow inventory is the houses that are foreclosed on, or VERY close to being foreclosed on, then your idea of sales/NOT is better. Basically the idea that Shadow inventory is bank inventory.
If you take shadow inventory to mean the broader idea of houses inwhich the current owner is not living up to the terms of the agreement, ie is in distress, than NOD is better. I very much doubt that alot of people who are short selling now would be if they were not in distress. Inventory is horrible enough as is, remove them and there would be nearly nothing left, anywhere.
So what Rich is trying to show is that even though sales are up off of their recient lows, more and more properties are being forced to confront the fact that they are upside down and cant make ends meet anymore.
Maybe they will be worked out, maybe helo Ben B will just start mailing checks to everyone, maybe they will get a new job and everything will be ok, maybe they will short sell, maybe they will get foreclosed on. Who knows. Maybe they will go hiking in the sierras and stub their toe on a huge gold nugget or shoot at a deer for food and hit some ‘Texas Tea’ instead. I dont know. The point is the pain is increasing, and increasing up the value ladder, even if some areas may have already become affordable again.
Ah, I see. I was viewing
Ah, I see. I was viewing shadow inventory in the not-for-sale foreclosure sense. I hadn’t considered the use of sales/NOD as a general stress indicator rather than an estimate of hidden properties — I guess I had tunnel vision from reading too much about the latter.
Maybe to clear my head I should take up hiking and hunting. 🙂
lubenthrust wrote:
Maybe to
[quote=lubenthrust]
Maybe to clear my head I should take up hiking and hunting. :)[/quote]
Just remember to hike without shoes on, and to hunt with a 50 cal rifle with no scope and bad eyesight. Jed would be proud.
If you run across Ellie May out there please feel free to give her my address and “send her on home”.
“When the jalopiee is a rockin, dont come a knockin.”
And while hunting, watch out
And while hunting, watch out for blind ex-VPs who are trigger happy.
I have been hearing a very
I have been hearing a very similar tale lately from several people… They call to try and get a loan mod because their arm is due to reset. They have VERY good income, an arm, and their home has lost value.
Then the bank explains that because it is adjustable and rates have gone down so much their arm is now at 3% locked for the rest of the year. So a 30 year fixed at 5.8% doesn’t make sense. They feel relieved and also worried what next year will bring.
I wonder what will happen next year if the rates ever do go up?
What will this segment of people do? Will they walk at that point?
This segment of people doesn’t show up on any graph but what is the likely hood of having 3% rates next year?
Rates need to be low for a
Rates need to be low for a quicker recovery. If they jump to much it will prolong or restart this whole mess
http://www.remodelingsd.com/bath_remodeling.html